Engineering conglomerate Larsen & Toubro sharply scaled down its outlook for new orders and projected lower margins as the slowing economy, inflation and high interest rates cast a shadow

L&T expects its order book to crawl up 5% this year, down from the earlier guidance of a healthy 15-20% growth. Its margins are likely to contract 75-125 basis points from last year's 12.8%. It earlier signaled a lower margin compression of 50-75 basis points while analysts said the company may scale down its outlook again.

L&T said in a statement “Intensifying competition, high inflation, elevated interest rates, volatile financial markets and delayed policy intervention are posing considerable challenge for the decision makers. Irrational pricing offered in the market place for the limited pie of opportunity is yet another factor to reckon in selection of remunerative projects to participate in.

CFO said "Investment sentiment is low, leading to deferral of projects. Orders are few and far between, leading to heightened competition resulting in lower strike rate in getting orders.”

L&T is banking on its robust backlog of orders worth INR 142,185 crore to deliver a 25% revenue growth.

The company sees a glimmer of hope in the international market, particularly in its hydrocarbons division, which bagged INR 700 crore order in Oman last month. It continues to look abroad for business while at home it has lost some high profile domestic projects, such as the 550 kilometer road project, which it lost to GMR.

(Sourced from PTI)